Bracken & Anor v Billinghurst

Acceptance of a cheque tendered in full and final settlement may create an accord and satisfaction, even where the payment is made by a third party. The question is whether the offer and the recipient’s conduct objectively demonstrate agreement to accept the payment in satisfaction of the disputed claim.

Construction of the settlement documents is a matter of law, assessed in their factual context. Retaining and cashing the cheque are strong evidence of acceptance, although neither is conclusive in every case. Where the offer has clear and limited terms, a later uncommunicated intention to reject the compromise does not prevent acceptance.

The claimants sought summary judgment to enforce two adjudication awards arising from building works at their property. The defendant maintained that the claims had been compromised.

The claimants had offered to settle for £6,000. The defendant’s solicitors responded with a £5,000 cheque, expressly tendered by Advance Building Technology Limited in full and final settlement of all disputes concerning the works. The claimants retained the cheque for almost three weeks, then presented and encashed it. They subsequently stated that they withdrew their settlement offer and intended to pursue the adjudication awards.

The central issue was whether presentation and encashment of the cheque constituted acceptance of the defendant company’s compromise offer and extinguished the claims.

1. Application dismissed. The claimants’ application for summary judgment was misconceived because the defendant had a complete defence based on compromise.
2. Construction of a document is a matter of law. In determining whether an agreement exists and identifying its scope, the court may consider the factual matrix and must assess the parties’ words and conduct objectively.
3. An offer made in full and final settlement requires an actual or potential dispute. Presentation of a cheque may amount to acceptance of the offer and give rise to an accord. Retention and encashment are strong evidence of acceptance, but the surrounding circumstances remain relevant.
4. The 6 September 2002 letter admitted of only one construction. It was an offer by Advance Building Technology Limited, acting through its solicitors, to settle all disputes relating to the building works. The cheque was tendered on those express terms.
5. The claimants received the cheque, retained it, and presented it for payment on 23 September 2002. Their later communications could not alter the objective effect of that conduct. Applying the principles in Day v McLean, Stour Valley Builders v Stuart and Hirachand Punanchand and others v Temple, the compromise was accepted and the claims were extinguished.
6. The court therefore declined to consider the second adjudication award or the second adjudicator’s refusal to revisit the identity of the contracting party. The claimants were ordered to pay the costs of the summary judgment application and the preliminary issue hearing on the standard basis.